PRIM, by contrast, had a private equity weighting of 17.7% as of Dec. 31, within the 12% to 18% target range its board set for 2022 and consequently able to continue making new commitments, Mr. Trotsky said.
If past is prologue, that capacity could prove valuable. "Some of our highest performing private equity vintage years originate during volatile times just like this," when other investors might be cutting their commitments for a variety of reasons, he said.
Mr. Trotsky credited the ability of PRIM's director of private equity, Michael McGirr, and his team to "painstakingly model our commitment pacing each and every year" for leaving the pension fund in that relatively advantageous position as a new year dawns.
"The fact that we're still within our range when others are not" points to a very disciplined annual process, Mr. Trotsky said, adding "it's not easy."
On Feb. 16, the board gave PRIM's private equity team additional room to run, lifting the pension fund's target range for the asset class by a percentage point — for the third year in a row — to between 13% and 19%.
Maintaining a consistent pace of private equity commitments has been key to the program's strong long-term results, Mr. Trotsky said.
For the year ended Dec. 31, PRIM's private equity portfolio suffered a 4.7% loss, in line with the returns of the benchmark index the pension fund employs for the asset class. But even with that hit, PRIM's annualized three-, five- and 10-year private equity returns remained well above 20%, more than twice as high as its portfolio's next highest-performing asset class.
The increase in PRIM's target ceiling to 19%, meanwhile, will allow the pension fund's investment team to make additional commitments of between $2.2 billion and $3 billion to private equity funds and co-investments opportunities this year, according to PRIM's agenda materials for the Feb. 16 meeting. The pension fund's new investments last year came to $2.9 billion.
On Feb. 16, the board moved to take advantage of that added leeway, approving more than $1.1 billion in new commitments, with the bulk going to private equity partners with which PRIM has worked for decades.
PRIM executives said the pension fund will commit:
- Up to $300 million to Hellman & Friedman Capital Partners XI. It will be the ninth fund managed by Hellman & Friedman in which PRIM has invested since 1995.
- Up to $285 million to GTCR Fund XIV. It becomes the 13th fund managed by GTCR in which PRIM has invested since 1987.
- Up to $335 million to TA XV and up to $35 million to TA Select Opportunities Fund III. They will be the 10th and 11th funds, respectively, managed by TA Associates in which PRIM has invested since 1997.
PRIM also announced a sizable commitment to a new manager, in line with its stated goal of increasing allocations to diverse and minority-owned managers. The board voted to commit up to $150 million to Pharmakon Advisors' BioPharma Credit Investments V.
At the board meeting, Deborah B. Goldberg, the Massachusetts state treasurer who serves as chairwoman of PRIM's board, pointed to Pharmakon's work with PRIM adviser Albourne Partners to address areas of concern that ultimately paved the way for PRIM's commitment as an example of the strength of PRIM's diversity program.
